A late-stage SASE startup led by a serial entrepreneur hauled in a massive equity investment to address the feature and capability needs of large enterprises.
The Tel Aviv-based company said the $238 million in funding will allow Cato Networks to more tightly align CASB and DLP capabilities with its SASE platform to facilitate access to cloud apps and safeguard sensitive data in motion and at rest, according to Chief Strategy Officer Yishay Yovel. The financing, led by LightSpeed Venture Partners, will allow the company to move toward an IPO in late 2024.
"Everybody likes simple, but these large enterprises cannot give up on the capabilities they need," Yovel said. "So we're closing the gap."
Cato Networks notched a $3 billion valuation in conjunction with its latest financing round, which is up 20% from $2.5 billion 23 months earlier despite a significantly worse macroeconomic climate. The company is founded and led by Shlomo Kremer, who previously established and helped take public application, API and data security vendor Imperva as well as network security provider Check Point (see: Cato CEO on Why Single-Vendor SASE Will Dominate the Market).
"We have experience in taking companies to an IPO," Yovel said. "There's a whole framework that a private company needs to build in order to execute an IPO and then run as a public company. And this effort has been ongoing."
Bringing CASB, DLP Into the SASE Fold
Cato Networks historically served companies no larger than the bottom quintile of the Fortune 500, but in recent years it has done work across the Fortune 500 with customers such as Carlsberg as its builds out more capabilities to address regulatory requirements, he said. Certain large enterprises must process incoming data in a particular manner as well as maintain audit logs and access and query repositories.
"These large enterprises cannot give up on the capabilities they need."
– Yishay Yovel, chief strategy officer, Cato Networks
From a technology standpoint, Yovel said, Cato plans to tightly integrate CASB and DLP features with an organization's most critical SaaS apps and then use artificial intelligence to automatically classify data. Once the data is optimized and correlated with other data stores that represent customer traffic, he said, Cato can pursue automated and intelligent threat hunting to spot resident malware or other attacks (see: Palo Alto, Versa, Fortinet, Cato Command SASE Forrester Wave).
"These are all areas of investment that we are going to drive to the product," Yovel said. "This is what the large customers expect, and this is where we're going."
Top-Notch Security Without All the Hassle
From a metrics standpoint, Yovel said, Cato will track annual recurring rate as well as the rate at which the company releases new add-on capabilities, which he said will allow Cato to expand its wallet share with existing customers. Cato also will track the percentage of large enterprise revenue flowing through channel partners, and Yovel said the company wants to see more contribution at the top of the market.
Yovel said Cato allows CISOs to address skill and resource constraints by providing top-notch security that's both self-maintained and resilient. A very large portion of the market doesn't have the skills or resources to run complex security technology on their own, and Yovel said Cato provides a secure and optimized platform with minimal resource outlay.
"A CISO can partner with Cato to get the equivalent of AWS for security," Yovel said. "This is why we're having the success that we're having in the market. Even companies that are large and scalable need all the help they can get securing their infrastructure."
